Edited version of your written advice

Authorisation Number: 1012660227256

Ruling

Subject: Tax deductible gifts

Question 1

Is a payment to X (the "organisation") a tax deductible gift in accordance with Division 30 of the Income Tax Assessment Act 1997 ("ITAA 1997") if the organisation reimburses an individual for travel expenses, and that individual subsequently gives the organisation a voluntary donation of money that is of similar, or equal value, to the reimbursement amount?

Answer

Yes.

This ruling applies for the following periods:

Year ending 30 June 2014

Year ending 30 June 2015

Year ending 30 June 2016

Year ending 30 June 2017

The scheme commences on:

1 July 2013

Relevant facts and circumstances

1. X is an Australian Charities and Not for Profit Commission ("ACNC") registered charity with deductible gift recipient ("DGR") status;

2. X works in overseas aid;

3. As part of working for X, members often pay for their own airfares and accommodation;

4. The members have no expectation of compensation for their travel expenses;

5. Occasionally, X is able to reimburse some, or all, of the travel expenses; and

6. When X reimburses the member's travel expenses, the member often gives the organisation a monetary gift of an equal or similar amount to the reimbursement.

Relevant legislative provisions

Division 30 of the Income Tax Assessment Act 1997

Reasons for decision

Issue 1

Tax deductible gifts

Question 1

Is a payment to X (the "organisation") a tax deductible gift in accordance with Division 30 of the Income Tax Assessment Act 1997 ("ITAA 1997") if the organisation reimburses an individual for travel expenses, and that individual subsequently gives the organisation a voluntary donation of money that is of similar, or equal value, to the reimbursement amount?

Answer

Yes.

Summary

If an individual seeks reimbursement for travel expenses from a deductible gift recipient ("DGR") registered charity, and subsequently provides the DGR with a voluntary donation of money of similar or equal value to the reimbursement amount, the payment to the DGR is a tax deductible gift.

Detailed reasoning

Taxation Ruling TR 2005/13 income tax: tax deductible gifts- what is a gift (TR 2005/13) explains what a "gift" is for the purposes of the gift deduction provisions in Division 30 of the Income Tax Assessment Act 1997 ("ITAA 1997").

Paragraphs 88 to 90 of TR 2005/13 provide examples that are applicable to your circumstances:

Example 17

G travels to a remote area to work for a DGR without remuneration. He pays for his own airfares. The expenditure is not a tax deductible gift to the DGR.

Where there is in fact a transfer of property to a DGR, the giver, though a volunteer, is entitled to a tax deduction in respect of the transfer.

Example 18

N is a telephone counsellor for a DGR. She provides a dedicated telephone at her home for this purpose. She pays all the costs associated with the provision of this telephone line ($300), and then seeks reimbursement from the DGR. After it reimburses her for these costs, she voluntarily gives the $300 to the DGR. The payment to the DGR is a tax deductible gift.

In accordance with paragraph 98 of TR 2005/13, the case authorities make it clear that for a transfer of property to be a "gift" it must be made voluntarily. A transfer will be voluntary if it is 'the act and will of the disponor and there was nothing to interfere with or control the exercise of that will' (Cyprus Mines Corporation v. Federal Commissioner of Taxation 78 ATC 4468 at 4481; (1978) 9 ATR 33 at 48).

As the examples above explain, individuals who receive reimbursement, and voluntarily give a monetary donation to a DGR, are entitled to a deductible gift receipt. Therefore, based on your facts, it would be acceptable for your organisation to provide a tax deductible receipt when an individual gives your organisation a monetary gift equal to, or of a similar amount, to the sum that you have reimbursed them for travel expenses.